Very taxing: dealing with the Israeli taxman!

“You don’t even have to file here.”
“You need to file, but you won’t pay anything, because you’re an Oleh Chadash.”
“The system is set up here so that people can work “black” (tax free).”
“You need to register as self-employed.”
“No one cares how you are paid. They expect you to not report the income.”

It’s tax time. OK, maybe not quite, but I want to be prepared. So, I started the ball rolling and met with an Israeli accountant. My situation is a little unique. I’m a full-time consultant with an American firm, and I’m paid in dollars back in the U.S. I know I need to file a return with Uncle Sam (and pay nothing except for social security taxes) – but should I also file a return in Israel?

Above are actual quotes from people about whether or not I should file here. (Relax, Uncle Schmuel – I am filing.) As you can see, there was hardly a consensus about what to do. And no trusted Yoda figure for me to consult with. Asking a million different people gave me a million different answers – you know the saying about Jews and opinions, right?

Call it naivete, or a Goody-Goody complex, but my personal moral compass led me to the Nefesh b’ Nefesh website, where I researched a list of accountants familiar with both Israeli and American tax systems. I made my first appointment just before the holidays. I explained my situation, everything was painless enough, and I wasn’t charged for the first meeting. B’seder.

The other shoe dropped during our second meeting, which took place after the holidays. My accountant expected to be paid a sizable monthly retainer. Now I don’t work for Goldman Sachs or Google; I work in the nonprofit sector. His retainer was about what I pay each month for my Internet, cell phone/BlackBerry service, and gym – combined. *Sad face.* On the plus side, it was an all inclusive service. I’d give him my deductible expenses each month, he’d register me with the system, do my bookkeeping, pay my Bituach Leumi (national health insurance-slash-Social Security…I think), and file my end-of-year return for me. I crapped my pants silently, said OK, and slinked out of his office.

“No, that’s high.”  “Dump him.” “My guy charges half that. I’ll get you an appointment. He doesn’t speak English though.” I made a million more phone calls and got a million more answers. What was I gonna do? I wanted to make an appointment with a second accountant, but didn’t feel like explaining my whole situation again. Plus, what if the second guy charged for that appointment? Maybe I should bluff and tell the first accountant I’d already taken the meeting with the second guy and that he quoted me a much lower rate, and I was saying sayonara. But what if the first guy didn’t blink?

The first guy doesn’t work on Fridays, and then Shabbat was here, so I had a few days to sweat sit with it. Then, I talked with a friend who’s lived here for years and never filed. Things seemed to come full circle after talking with her, and I thought: maybe I’ll just “go rogue” – Palin style – and not file.

D-Day came, and I called up my accountant on Yom Rishon when he was back in the office. It was hard for me, but I told him everyone I spoke to said his rate was very high, and I was recommended several other accountants who would charge me half his rate, and I’d have to go with one of them. I offered to pay him for the work he’d done so far, and then walk.

That’s the end of the column this week. You have to come back next week to hear the rest.

Sike. My prayers were answered. He said he could be flexible with me and lower my rate for 2010.  Um, how about lowering it now?, I countered with. He caved. Yay! Besides relief, I felt proud that I had taken a risk, especially because it had been uncomfortable for me. Of course, I’m happy it turned out favorable for me, and I believe I was rewarded for taking a hard line with him.  Color me Israeli, bitch.



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